Public Choice and the Economics of Voting

Guest post by Kyle Jackson, from his presentation at an Economic Thinking workshop. 

Public Choice
is the study of political behavior through the lens of economic theory. When
studying economic questions, we assume individuals are rational
and self-interested, which is a fancy way of saying people choose goals and then try
to achieve them. In public choice theory, this means simply assuming that an
individual has the same motivations and desires in the political sphere as sheJames Buchanan,
the father of public choice theory, described this approach as “politics
without romance” and it has led to several insights regarding how our political
institutions actually work as opposed to how we want them to work. Below are
three of the most important public choice concepts to keep in mind when
discussing Federal election reform.

The Median-Voter
Theorem

In an election with simple majority rule, the candidate with
the most votes wins. If there is only one issue in an election and the voters
are all evenly distributed along the political spectrum, who would win between
a centrist candidate and a candidate on one of the extremes? The centrist
candidate obviously. He will split one wing of voters with the extremist while
receiving the full support of the other wing. Successful politicians realize
this and will move their positions to the center of the electorate—they can count
on the support from their wing whatever position they take and moving to the
center will attract more voters. When both candidates follow this strategy,
they end up just barely to the right and left of each other and the middle (or
“median”) voter will decide the election.

Obviously, real life is a bit more complicated. Elections
hinge on more than one issue and not everyone falls into a perfect line on the
political spectrum. But as a stylized story, the median-voter theorem helps us
understand why candidates like Mitt Romney will spend the primary season
touting their conservative credentials and then seem to shift to the middle
when it comes to the general election. In the Republican primary, the voting
population is far more conservative than the general public, and candidates
like Gov. Romney have to appear pretty conservative to attract the median
voter. But when the general election comes along, if Gov. Romney doesn’t at
least appear to shift to the middle he will be losing valuable centrist votes.

The implications for debate rounds are that the structure of
voting systems matters because it plays a role in determining the outcome. For
example, if all states were required to use a caucus (which tends to be more
favorable for hard-core political movements) for their primary elections, the
candidates selected to run in the general election could be further to the
right or left than the ones currently selected.

Rational Ignorance

Rational ignorance is the idea that it makes sense for
people to pass on information when the cost of gathering that information will
outweigh the information’s benefit. For example, it makes sense that most
Americans don’t speak Latin—learning a new language takes a lot of time and effort
and there are very few opportunities for the average American to use Latin. The
same idea helps explain why voters are usually shockingly ignorant of the
current political situation. Having a well-informed opinion on policies and
candidates is only really beneficial when an individual makes a decisive vote
between the alternatives. But for the typical voter, the only time his vote
directly affects the political landscape is when he is the deciding vote in an otherwise
tied election, an event that is likely to happen about
once in every 60 million presidential elections. With this incredibly small
chance to receive a benefit from political knowledge, it’s not surprising that
even the smallest information gathering costs discourages the typical voter from
learning basic political facts. As the economist Anthony Downs said, “it is
irrational to be politically well-informed because the low returns from data
simply do not justify their cost in time and other resources.”

Rational ignorance has a couple of implications for debate
rounds. Any reform that increases voter knowledge is going to lead to better
electoral decisions, and there are two was to raise the average. Given the current
state of the electorate’s knowledge, even modest changes could raise the
average knowledge level of the general public. Another, more controversial option
is to create some kind of aptitude voting test. An argument could be made for
restring the rights of ignorant voters to wield political power, but this is
fraught with problems and easily attacked for being non-democratic.

Rational
Irrationality

One common response to the issues of rational ignorance is
to argue that the errors of ignorant voters will cancel out due to the
law of large numbers. While any given voter is probably uninformed and
therefore wrong in his assessment of a candidate, in large enough numbers these
errors will tend to cancel each other out and the electorate as a whole will behave
as if it had been fully informed. For example, if 45% of an electorate
overestimates a candidate’s trustworthiness and another 45% underestimate that
same candidate, these two erroneous groups will cancel each other out leaving the
decision in the hands of the informed 10%. Some economists argue this is why we
see such high reelection rates. If a voting body was as prone to error due to
ignorance as the rational ignorance model suggests, we should see incumbents
being constantly thrown out of office after spending the previous term
demonstrating their unsuitability. The fact that we see very high reelection
rates suggests that the electorate made the correct choice among candidates the
first time around.

Economist Bryan Caplan points out that this notion of
democratic efficiency relies on a major assumption: that uninformed voters are
evenly divided between those that underestimate a candidate or policy and those
that overestimate a candidate or policy. If instead the errors are systematically
skewed one way or another, the electorate will consistently demand too much or
too little of certain policies.

In The Myth of the
Rational Voter, Caplan argues that this is indeed the case.

The implications of rational irrationality are largely the
same as those for rational ignorance. Any reform that limits the electorate to
that group of people that is fully informed and will bear most of the costs and
benefits of certain political decisions will make wiser choices.